‘The Network Effect’ Keeps Match Group Dominant, says Seeking Alpha Analyst

A Seeking Alpha analyst has given a new take on the dominance of Match Group, suggesting that a ‘network effect’ in the winner-takes-all digital economy will keep the firm top of the dating niche.

The network effect is similar to the concept of ‘economies of scale’, but is taken from the consumer’s perspective.

For a single user, the more other users a product has then the more convenient it is for other users to choose the same product.

The same principle is responsible for the widespread implementation of Visa cards, the author notes.

It may also be applicable to the tendency for one search engine (Google), one movie streaming service (Netflix), and one social network (Facebook) to win out.

The impact of successfully cultivating network effect-style growth is said to be ownership of around 80% of the market.

The article closes: “A strong network can make for a seemingly impenetrable moat with continued revenue growth and security for years to come.

“Match Group (MTCH) looks like a good contender to solidify an up and coming network that could payoff for years to come, or even potentially garner Facebook-esque returns.”

MTCH stock recently hit a 52-week high after CEO Mary Ginsberg announced Tinder was introducing an optional woman speak first mode.

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